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FDI, Trade and Integration in Mercosur

  • Castilho, Marta
  • Zignago, Soledad

In the 90’s, the Mercosur countries experienced a strong growth of trade and foreign direct investment (FDI). To examine the relationship between FDI, trade and regional integration in the Mercosur, we tested different disaggregated gravity equations on trade and FDI flows between two Mercosur members – Argentina and Brazil – and their partners during the 90’s. Our results attest a strong relationship between FDI and imports, but a weak and negative linkage between FDI and exports. This reinforces the perception that the investment flows into the Mercosur countries has generated strong flows of imports without generating exports. Another important result is the relevance of Mercosur in multinational firms strategies that seems to be different depending on the country where the firm is located. Firms installed in Brazil give an importance to the regional market while the firms installed in Argentina, assume that regional market is not a relevant issue.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43886.

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Date of creation: 2002
Date of revision:
Handle: RePEc:pra:mprapa:43886
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  1. María Inés Terra & Marcel Vaillant, 1998. "Política comercial y política de infraestructura: un ejercicio de simulación de los impactos regionales en el MERCOSUR," Documentos de Trabajo (working papers) 0797, Department of Economics - dECON.
  2. Blomström, Magnus & Kokko, Ari, 1997. "Regional Integration and Foreign Direct Investment," CEPR Discussion Papers 1659, C.E.P.R. Discussion Papers.
  3. Massimo Motta & George Norman, 1993. "Does economic integration cause foreign direct investment?," Economics Working Papers 28, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Antoine Bouët, 2000. "La mesure des protections commerciales nationales," Working Papers 2000-15, CEPII research center.
  5. Norman, George & Motta, Massimo, 1993. "Eastern European Economic Integration and Foreign Direct Investment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(4), pages 483-507, Winter.
  6. María Inés Terra & Adriana Gigliotti, 1994. "Mercosur: localización de la producción. Un modelo de geografía económica," Documentos de Trabajo (working papers) 0794, Department of Economics - dECON.
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